As business leaders, we often focus too much on the numbers and not enough time on the Company's #1 asset - its people.

1. Guide to Talent Planning
for the Middle Market CEO

2. Guide to Talent Planning for the
Middle Market CEO
No surprise: The best-performing companies tend to have the best people working
for them. Research from the National Center for the Middle Market (NCMM)
confirms that the performance of a company is closely linked to the caliber of its
talent.
What’s less obvious, however, is that talent planning has a strong correlation with the
growth and performance of a company. NCMM researchers found that in the middle
market, the fastest-growing and best-performing companies make the right decisions
about talent planning. They tend to:
• have a formal talent-planning process,
• engage in a comprehensive assortment of talent-planning initiatives, and
• encourage involvement in the talent-planning process by senior executives and top-
line executives.
To gain greater insight into these and other talent-planning issues, NCMM—with the
support of Vistage—surveyed 400 C-level executives from middle-market companies who
are actively engaged in attracting and retaining talent for their organizations.
The study benefits C-suite executives from middle-market companies in two key ways, says
Thomas A. Stewart, NCMM executive director and one of the study’s developers. “It proves
that there is a big return on investing in the management of people, and it gives
you a framework and a set of activities that you can do to start improving the way you
manage people,” he explains.
Here are six takeaways from the study to help you make smarter decisions about
talent planning.
What is talent planning?
Talent planning is a broad
category that includes activities
such as succession planning,
talent review, human resource
planning, bench strength analysis,
staffing development, and
performance management.
Defining the middle
market
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3. 1. Talent planning is a powerful
business driver.
Here’s a compelling reason to invest in talent planning: It has a strong correlation with
revenue growth.
The NCMM study found that companies with an annual revenue growth of 10 percent
or more are significantly more likely than slower-growing organizations to say they
perform very or extremely well at talent-planning initiatives. Those initiatives might include
identifying critical positions and “can’t-lose” players or engaging management in the
talent-planning process.
Vistage Chair Mark Taylor, who guides five peer advisory groups for CEOs and key
executives, has also observed a shift in talent-planning approaches once companies reach
a revenue milestone.
“Right about that $20 million mark in revenue is when I see that CEOs are looking at talent
planning in a different way,” he says. “Until then, they’re more opportunistic, versus having
a specific planning process.”
When it comes to talent planning, what makes the fastest-growing, best-performing
companies different from their slower-growing peers? According to the study:
1. They place more importance on talent planning.
2. They are more likely to engage in a full suite of talent-planning activities.
3. They are more likely to say they perform “very well” or “extremely well” at
talent-planning initiatives.
Tip: Treat your
recruitment process
like your sales process.
“Companies must always be cultivating for
great people. Approach recruitment like a
sales process and fill the top of the pipeline
with people who might be game changers.”
Kathleen Quinn Votaw,
CEO of TalenTrust, a firm focused on helping
companies attract, retain and engage top talent
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4. 2. The size and structure of an
organization have a significant impact
on how talent planning is conducted.
Large middle-market companies prioritize different talent-planning issues than smaller
middle-market companies. The former are more concerned with aligning talent and
business strategy, while the latter focus on identifying and retaining the “can’t-lose” players.
What can account for this difference? Stewart points out that as a company grows, talent
management undergoes a maturation process. In other words, there’s a maturity model
that applies to human resources.
“In smaller companies, the job responsibilities of each person tend to be broader and more
flexible,” Stewart says. “So they use a ‘best-athlete strategy’ as far as talent is concerned.”
But that decision-making process changes when the company gets bigger. “Rather
than just pick the best athletes, you tend to think about how you manage talent, how you
identify potential, and how you move people up in their departments,” he says.
Source: Survey of 400 C-level middle market executives by the National Center for the Middle Market,
in partnership with Vistage Worldwide
INVOLVED IN COMPANY-WIDE
TALENT PLANNING DECISIONS
INVOLVED IN BUSINESS UNIT
TALENT PLANNING DECISIONS
Human resources
director
C-level executives
Business unit
leaders
Owner/principal
President/
Vice President
Chairman other
board members
88% 86%
84% 76%
84% 87%
83% 79%
73% 64%
60% 55%
56% 51%
43% 35%
39% 44%
41% 34%
37% 31%
23% 19%
Very involved Somewhat involved
TALENT PLANNING PROCESS
TOTAL $50M–$100M$10M–$50M $100M–$1B
Highly formalized with written
rules guidelines
Somewhat formalized with some
aspects of process documented
Mostly informal with few if any
aspects documented
22% 22%17% 27%
52% 58%52% 48%
26% 20%31% 25%
≤ ≤ ≤
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5. 3. There is room for improvement in the
talent-planning process.
Four in 10 companies grade their talent-planning effectiveness “C” or lower,
according to the study.
That doesn’t come as a big surprise to Taylor. Very few CEOs that he works with think
about one aspect of talent planning in particular: succession planning. “The challenge that
CEOs face is the amount of money and time that this process takes. As you’re growing, the
question is: ‘Where do I spend my money? Am I going to really get a return on investment
by hiring a vice president of marketing, or should I just outsource it?’ There is just so much
uncertainty.”
Quinn Votaw agrees. “We are at a dangerous place with succession planning,” she
cautions. “Three out of four people today are open to or actively seeking another position.
Companies are focused on the positions that they have open, which is great. But what
about the rest of it?”
Among the most common weaknesses, according to the NCMM researchers, were
succession planning, identifying skills gaps, and having processes in place for
identifying and developing high-potential employees.
13
Overall, just 14% of middle market leaders give their firms an
“A” when asked to grade their talent planning performance
overall. Some 46% grade themselves a “B”, while more than
four in 10 leaders report a grade of “C” or lower. Those
that do give themselves an “A” are likely to be the fastest
growing and best performing companies.
Looking at specific talent planning activities, companies
consider themselves best at identifying the most important
positions within the business. They also do fairly well at
identifying their best performers and can’t-lose players.
Companies are less likely to consider themselves adept at
succession planning, identifying skills gaps, and identifying
and developing high potential employees. Not surprisingly,
middle market leaders view these activities as some of the
most challenging aspects of the talent planning process.
Performance Challenges
%
Identifying external talent
pools
Identifying current future
skills gaps
Lining up successors for
critical, can't-lose players
Processes to regularly
assess employees
performance potential
Lining up successors for
key players
A process to identify best
performers
Tools processes to retain
critical players
Identifying critical, can't-
lose players
Process to identify
develop high potentials
Engaging line management
in talent management
Identifying retention skills
Identifying critical positions
(i.e. have to be filled by
excellent players)
45% 33%
45% 33%
43% 32%
41% 32%
41% 31%
39% 30%
TALENT PLANNING GRADE
A = 14%
C = 28%
B = 46%
D = 11%
F = 2%
EXTREMELY/VERY CHALLENGING ASPECTS OF TALENT PLANNING
The survey showed room for improvement in the
talent-planning space, with more than 40% of
middle market organizations giving themselves
a grade of “C” or lower for their talent-planning
efforts.
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6. 4. The single most important
thing companies lack is a
systematic framework for talent
planning.
The study found that talent-planning performance is closely connected to two
variables:
• the formalization of talent-planning processes and
• the number of talent-planning activities implemented.
What’s more, only 22 percent of middle-market firms reported having a
formalized process for talent planning.
Why do companies need to have a systematic framework? “The value of a
framework is that it allows you to see all the elements of talent planning, not
just the ones you know about,” explains Stewart. “It gives you a way to think
about the things that you are not doing or that you’re not doing as well as
other things. A framework helps you to set priorities and say, ‘All right, now I
have a picture of the landscape, and with that picture, I can navigate better.’”
“The value of a framework
is that it allows you to see
all the elements of talent
planning, not just the ones
you know about.”
—Thomas A. Stewart
Executive Director, NCMM
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7. According to NCMM researchers, companies need four elements to
build an effective talent-planning framework, or “ABLE Framework”:
• Align talent strategy with corporate strategy.
• Build sufficient processes to ensure systematic talent-planning
efforts.
• Lead by example and involve leadership in the process.
• Engage employees in talent planning and ensure that they
recognize the value of the process.
You need all four elements, as opposed to just two or three. “If you
pull any one out, the table falls over,” says Stewart. “Let’s say you
have great talent-planning processes, your leadership is deeply
engaged in them, and your employees think they’re great—but
they have nothing to do with your strategy. You’d be optimizing a
buggy-whip workforce.”
Involving leadership in the talent-planning process may be one
of the biggest challenges for companies, adds Taylor. “It’s a dance,”
he says. “Certainly, the CEO needs to be involved in the hiring of
anyone at the executive level, but it’s a balance between how much
time do you spend with hiring versus how much do you delegate.”
The ultimate responsibility for talent planning rests with the HR
director in about half of middle-market companies, according to the
study. In three out of 10 mid sized companies, C-level executives lead
the talent-planning process.
5. Successful talent planning involves four core elements.
In general, middle market firms use internal resources for
talent planning, and only 29% look to external consultants
for help in this area.
firms
Human resources
director
C-level executives
Business unit
leaders
Owner/principal
President/
Vice President
Chairman other
board members
71
51%
31%
28%
21%
19%
7%
PRIMARY RESPONSIBILITY
FOR TALENT PLANNING
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8. 6. Succession planning, programs for high-potential
employees, and identification of skills gaps are critical
areas for improvement.
Companies that want to increase their talent-planning success should focus on three key
areas: Succession planning, programs for high-potential employees, and identification of skills
gaps.
Middle-market companies, in particular, often struggle to complete these activities because
they’re so busy dealing with daily business demands. “You’re so busy working in the
business that you don’t spend enough time working on the business,” Stewart says.
Also, most companies “don’t have a lot of extra resources lying around to put on special
projects.”
If your company doesn’t have the budget for a formal management training program, then
the onus falls on individual leaders to address employees’ skills gaps, says Taylor. “Figure out
a learning plan that’s going to help employees get better at a particular skill, meet with them
on a regular basis to assess their performance, and see that they’re improving,” he advises.
Tip: Treat people as your
most important asset.
”We say that people are our most
important asset, but we don’t treat them
as our most important asset,” says Quinn
Votaw. One way to shift this behavior: Be
purposeful about developing recognition
plans and reward plans for your
employees, she recommends.
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9. Mastering Talent Planning
A Framework for Success
IN COLLABORATION WITH
The bottom line: To accelerate the growth and performance of
your company, you need to have a solid talent-planning process in
place. Thomas Stewart and Larry Inks offer this guidance on how
to get there.
Identify your high-potential people.
A lot of companies confuse top-performing employees with
high-potential employees, but they’re not necessarily the same,
says Inks. This distinction is especially important when you’re
developing succession plans, identifying skills gaps, and managing
retention risks.
Assess and build your bench strength.
Who are your critical players, and what key decisions do they
make? Understanding this is key to establishing your bench
strength—that is, making sure that you have a steady stream of
people who are ready to take over for a critical player if/when the
need arises.
Don’t just pay lip service to performance management;
commit to it.
A lot of companies say that they do performance management,
but not all of them give it the attention it deserves. Make sure that
it’s fundamental to your business model, advises Inks. Pay as much
attention to it as you do financial planning. Discuss it as part of
your quarterly business review. Ensure that the senior leadership
team is as committed to the process as you are.
Take stock of your human capital.
To use your human capital more strategically, have an in-depth
understanding of who’s on your team and what capabilities
they have. Not only will this make you more effective at team
development, but it will enable you to make smarter decisions
about how you channel resources and conduct strategic planning.
Use the ABLE Framework.
Schedule a meeting with your executive team and distribute the
ABLE Framework featured in the NCMM whitepaper. Then, have
a candid discussion about the framework in the context of your
company. Figure out what you need to start working on—whether
that’s talent mapping, creating new processes, or identifying
high-potential players—and establish a game plan.
Next steps
Expert advice on making better decisions
about talent planning
Get the whitepaper
Download the whitepaper “Mastering
Talent Planning: A Framework for Success”
(http://bit.ly/talentwp) for more insights
about the talent-planning process and the
ABLE Framework.
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10. Contributors
Thomas A. Stewart
Executive Director, National
Center for the Middle Market
Thomas A. Stewart is the Executive Director of the National Center for the Middle Market, based
at The Ohio State University. Previously, he served as Chief Marketing and Knowledge Officer for
Booz Company (now Strategy) and was the Editor and Managing Director of Harvard Business
Review. His book Woo, Wow, and Win: Service Design, Strategy, and the Art of Customer Delight (co-
authored by Patricia O’Connell) has just been published.
Larry Inks
Clinical Associate Professor
of Management and Human
Resources, Fisher College
of Business, The Ohio State
University
Larry Inks, Ph.D., is actively involved in executive education programs and initiatives offered
through the Fisher College of Business as well as consulting for external organizations. Most
recently, Dr. Inks was Vice President of Organization and Leadership Development for Cardinal
Health. Inks also worked with AlliedSignal as head of Organization and Leadership Development
for their Polymers business.
Mark Taylor
Vistage Master Chair
and speaker
Mark Taylor, a former Vistage member of 11 years, is a Vistage Chair of five groups, keynote speaker,
Tribal Leadership trainer, organizational consultant, author, and results-oriented executive with 35
years in CEO and corporate executive roles. He delivers training and retreats for organizations that
want to change their culture to create high-performance organizations. He is the author of
The Leadership Field Manual: Exercises Tools for Executing Culture Change.
Kathleen Quinn Votaw
CEO, TalenTrust
After nearly two decades in the industry, Kathleen Quinn Votaw vowed to disrupt the status quo
by revolutionizing how companies find, keep and grow great people. Her solution, TalenTrust, has
achieved 300% revenue growth over the past three years and was named to the 2015 and 2016
Inc. 5000 lists. Kathleen is the author of Solve the People Puzzle.
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11. About Vistage Worldwide
Vistage Worldwide is an organization designed exclusively for high-integrity
CEOs and executive leaders who are looking to drive better decisions and
better results for their companies. Our members—21,000 strong in more than
16 countries—gather in trusted, confidential peer advisory groups where
they tackle their toughest challenges and biggest opportunities. Leveraging
the Vistage platform, our members have demonstrated the ability to refine
their instincts, improve their judgment, expand their perspectives, and
optimize decision making. CEOs who joined Vistage grew their companies at
three times the rate of the average U.S. company, according to a 2015 Dun
Bradstreet study. Learn more at vistage.com.
About the National Center for
the Middle Market
The National Center for the Middle Market is a collaboration between The
Ohio State University’s Fisher College of Business, SunTrust Banks Inc., Grant
Thorton LLP, and Cisco Systems. It exists for a single purpose: to ensure that
the vitality and robustness of middle-market companies are fully realized as
fundamental to our nation’s economic outlook and prosperity. The Center
is the leading source of knowledge, leadership, and innovative research on
the middle-market economy, providing critical data analysis, insights, and
perspectives for companies, policymakers, and other key stakeholders to help
accelerate growth, increase competitiveness, and create jobs in this sector. To
learn more, visit www.middlemarketcenter.org.
© 2017 Vistage Worldwide, Inc. 17_221_5000 Talent Planning
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